Demand for retail space in the Philippines rises

The thriving retail sector in the Philippines could be one of the main beneficiaries of President-elect Rodrigo Duterte’s plans to liberalize rules restricting foreign investment, a new research by Oxford Business Group revealed.

Along with most domestic retail activity, the research noted that among the sectors currently deemed out of bounds for overseas investors are broadcasting, domestic shipping and pharmaceuticals.

A boost in foreign investment

This could soon change, with Duterte officials announcing in mid-May that constitutional amendments could be considered to boost the attractiveness of the Philippines to foreign direct investment (FDI). In 2015, the Philippines attracted $5.72 billion in FDI, more than five times the $1.07 billion achieved in 2010.

The 2015 total, however, represented just over 2 percent of GDP, which has left the Philippines well behind most of its ASEAN neighbors. By opening up retail and other sectors to FDI, the Duterte administration could lift the country’s inbound FDI levels closer to the ASEAN average of over 5 percent of GDP.

Strong demand for retail space

The report further noted that demand for retail space is gaining momentum with the Philippines as one of three countries in the region to post rental rate growth in the first quarter of 2016, according to a recent report on retail rentals in Asia from real estate services firm Jones Lang LaSalle (JLL).

Rental costs for retail space rose 1.9 percent quarter-on-quarter, according to the JLL report, driven by strong demand in Metro Manila, particularly, in the food and beverage sector.